Their hate of SOFI is an opportunity for anyone who understands the business. Same was said of Amazon early on. So much hate for that company 20+ years ago.
Always appreciate your posts, has kept me on the right side of this one for the past few years. When I saw the downgrade today I was hoping you would have something to say. Absolutely nailed it!
The downgrade was the stupidest downgrade ever given... They made me miss out on potential grains and a major loss, I will never trust that firms analysis again...
This is a very good post. Well written, with irrefutable numbers when comparing them vs. KBW expectations. Some random observations:
- In my experience, it is important to not take a piece of analysis for granted, regardless of whether it goes in my favor or against. I have witnessed a few cases of lazy reports of some Wall Street analysts about biotech companies I care (I focus on financials and biotechs), which could drive to the wrong conclusions and/or actions to the intending audience. The dissecting of the initial 2024 KPI expectations vs. reality was self-explanatory. Moreover, unless I am missing something, the analyst did not take those learnings from company's actuals into future expectations, which makes me infer that the analysis was not only wrong, but lazy. Again, very good work here.
- I might have different perspectives on some topics versus what you state. For example: loan losses peaking. As long as the economy remains strong, financials should see indeed this, including SOFI. However, any downturn of the economy in the future could result in a revision of any predictive losses and can go back in peak again. The 2005-08 has plenty of examples. But again, if that were to happen, it would not be unique to SOFI. Tracking monthly delinquencies published by large banks via 8K could be a way to track (I assume that you do this already). Upcoming earnings, internals (e.g. provision for credit losses by vertical, etc.) and commentary by leading banks could be another. So far, this should remain, but I would refrain from categorically state that losses peaked. Just my opinion.
There is more, but that will be for another time.
Disclosure in financials:
Long UBS and Basler Kantonalbank (UBSG and BKB in the Swiss market)
SOFI Jan $13 puts (nearly worthless - rationale by then: valuation and overbought), and NU Mar $9 puts (rationale: proxy for Brazil). Mindset: Neutral/positive SOFI; bullish LT NU
I look forward to the Q4 result and the 2025 guidance from SoFi.
The SoFi Centre launches on Jan 7. If we make certain assumptions regarding age and financial needs of this segment then it would be an outstanding opportunity to launch wealth management, even if at this stage it was with a partner institution.
"... walk uphill both ways when they go to work." Perfect analogy! Do analysts have to go through any training to obtain certification? Maybe you could open a side gig training them, unless some analysts are just lazy.
Their hate of SOFI is an opportunity for anyone who understands the business. Same was said of Amazon early on. So much hate for that company 20+ years ago.
Thank you for this great post!
Outstanding analysis (unlike KBW!) Thank you so much Chris!
Always appreciate your posts, has kept me on the right side of this one for the past few years. When I saw the downgrade today I was hoping you would have something to say. Absolutely nailed it!
The downgrade was the stupidest downgrade ever given... They made me miss out on potential grains and a major loss, I will never trust that firms analysis again...
This is a very good post. Well written, with irrefutable numbers when comparing them vs. KBW expectations. Some random observations:
- In my experience, it is important to not take a piece of analysis for granted, regardless of whether it goes in my favor or against. I have witnessed a few cases of lazy reports of some Wall Street analysts about biotech companies I care (I focus on financials and biotechs), which could drive to the wrong conclusions and/or actions to the intending audience. The dissecting of the initial 2024 KPI expectations vs. reality was self-explanatory. Moreover, unless I am missing something, the analyst did not take those learnings from company's actuals into future expectations, which makes me infer that the analysis was not only wrong, but lazy. Again, very good work here.
- I might have different perspectives on some topics versus what you state. For example: loan losses peaking. As long as the economy remains strong, financials should see indeed this, including SOFI. However, any downturn of the economy in the future could result in a revision of any predictive losses and can go back in peak again. The 2005-08 has plenty of examples. But again, if that were to happen, it would not be unique to SOFI. Tracking monthly delinquencies published by large banks via 8K could be a way to track (I assume that you do this already). Upcoming earnings, internals (e.g. provision for credit losses by vertical, etc.) and commentary by leading banks could be another. So far, this should remain, but I would refrain from categorically state that losses peaked. Just my opinion.
There is more, but that will be for another time.
Disclosure in financials:
Long UBS and Basler Kantonalbank (UBSG and BKB in the Swiss market)
SOFI Jan $13 puts (nearly worthless - rationale by then: valuation and overbought), and NU Mar $9 puts (rationale: proxy for Brazil). Mindset: Neutral/positive SOFI; bullish LT NU
Great article. Thank you.
I look forward to the Q4 result and the 2025 guidance from SoFi.
The SoFi Centre launches on Jan 7. If we make certain assumptions regarding age and financial needs of this segment then it would be an outstanding opportunity to launch wealth management, even if at this stage it was with a partner institution.
It should be an interesting month ahead for SoFi.
Thank you! So well put together and in such a short timeframe
"... walk uphill both ways when they go to work." Perfect analogy! Do analysts have to go through any training to obtain certification? Maybe you could open a side gig training them, unless some analysts are just lazy.